ON Semiconductor Corporation (ON)

Payables turnover

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Cost of revenue (ttm)	US$ in thousands	3,866,200	3,999,000	4,186,600	4,336,400	4,369,500	4,376,400	4,360,600	4,307,500	4,249,000	4,179,800	4,066,800	4,048,700	4,025,500	3,960,300	3,815,100	3,624,500	3,539,200	3,506,600	3,537,100	3,546,600
Payables	US$ in thousands	574,500	597,500	617,700	665,800	725,600	911,300	907,500	976,200	852,100	791,700	793,800	725,300	635,100	599,300	610,200	605,000	572,900	534,200	522,900	503,900
Payables turnover		6.73	6.69	6.78	6.51	6.02	4.80	4.81	4.41	4.99	5.28	5.12	5.58	6.34	6.61	6.25	5.99	6.18	6.56	6.76	7.04

December 31, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $3,866,200K ÷ $574,500K
= 6.73

The payables turnover ratio for ON Semiconductor Corporation has shown some fluctuations over the period under review. The ratio declined from 7.04 on March 31, 2020, to 4.41 on March 31, 2023, indicating a lengthening of the payables turnover cycle. This may suggest that the company is taking longer to pay its suppliers, which could impact its relationships with them.

However, the ratio improved from 4.41 on March 31, 2023, to 6.78 on June 30, 2024, showing a trend towards a more efficient management of payables. This increase could be a positive sign, indicating that the company may be optimizing its working capital and cash flow by paying suppliers more promptly.

Overall, it is essential for ON Semiconductor Corporation to carefully monitor its payables turnover ratio to ensure it strikes the right balance between managing payables effectively while maintaining strong supplier relationships and liquidity position.